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UGL sells DTZ, appoints new CEO

Greg Roberts

Engineering and property services company UGL is expected to wipe out debt and seek new acquisitions after selling its real estate business for $1.2 billion.

It has also appointed engineering firm Tenix's former boss Ross Taylor as its new chief executive.

The move is a return to the company's roots as an engineering-only business seven years after moving into the property space and dramatically expanding into a global firm, employing 52,000 people in 52 countries.

It said it would net about $1-$1.05 billion from the sale of DTZ to a private equity consortium including TPG Capital, depending on various costs and taxes.

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The price is below the $1.5 billion speculated about in February, when the company first revealed that it preferred a trade sale to a spin-off of DTZ as a separately listed business.

However UGL chief executive Richard Leupen said the sale price represented a fair valuation for DTZ and would deliver significant value to shareholders.

"The sale price reflects the significant value we have created in building a unique platform over this time delivering a highly positive result for UGL and its shareholders," he said.

One analyst, who did not want to be named, disagreed describing the result as only "so-so" for shareholders.

"I think expectations had been wound back over the last month, the outcome is clearly weaker than what might have been envisaged a few months ago," the analyst told AAP.

There was speculation the company might have held out for a better price if it had come from a stronger balance sheet position, than the relatively high current net debt of close to $650 million it was carrying.

The company's share price reflected that uncertainty, recovering from early losses to be up four cents to $6.98 at the close of trade.

DTZ dominated UGL's profit last year, but analysts were positive about its new status as an engineering, construction and maintenance services business, given bullish predictions about infrastructure spending in Australia.

There is speculation that with low gearing it will now look at mergers or acquisitions of engineering groups, such as Leighton-owned John Holland, or Transfield.

New chief executive Ross Taylor was recently poached from engineering design firm Tenix, where he was chief executive.

He will take over from Mr Leupen in November and receive a $1.5 million base salary plus possible short term annual bonuses of $1.5 million and long term of $5.5 million over nearly four years, the company revealed on Monday.

After the sale UGL would employ 6,650 workers with annual revenue of more than $2.3 billion - compared to $4.3 billion now - and resume paying dividends in 2015, the company said.